The impact of foreign workers in the government sector on labor productivity in Saudi Arabia

الملخص EN

The increasing numbers of expatriates working in Saudi Arabia results from several factors including prolific economic expansion, growing demand for skilled workers in the labor market and lower employment costs for foreign manpower.

This study determines the effect of the utilization of foreigners within the government workforce and how it relates to labor productivity in Saudi Arabia using the Stock and Watson approach of "dynamic ordinary least squares", or DOLS (1993).

The model specification derived in this study was developed using the Cobb Douglas production function.

The conclusion of this study clearly indicates that domestic labor productivity is higher than foreign labor productivity.

This might occur because the foreign laborers don’t remain for a long time in their jobs in Saudi Arabia, whereas the long time that Saudis spend in their jobs enable them to be more productive and attain accumulated experience from foreign labor's substitution.

Then, the government employs foreign laborers to transfer their skills to domestic laborers, after which they are substituted when domestic laborers become more productive than foreign laborers.

With time, the Saudi workers will increase gradually in the government sector until reaching a level where all foreign labor has been fully substituted.

Thus, it is evident that it will take a lengthy period for the government to diminish the reliance on a foreign workforce.